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Taxability of other income

Joshv (CA inter) (288 Points)

04 April 2011

Hi,

My client is having Salary income and other income.

He earned salary income of 3.6 lakhs for the FY 2010-11 (Rs.35000 from previous emplyoer and Rs.330000 from present employer).

Also he earned Rs.75000 from his part time assignments.

Can i suggest him to show this Rs.75000 as income from other sources. If so, what is the % of total receipts of Rs.75000/- to offer as income in his tax return?

Also, can i suggest him to deduct expenses incurred to earn this part time income?

I want to prepare his income tax return under two heads 1) Salary income 2) Other income (basically he is an accountant without professional degree).

Or is Rs.75000/- part time earnings can be shown under the head of "PGBP" ?

Thanks for any suggestions from our CACites..

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5 Replies

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 04 April 2011

pgbp and employment are both contradictory, usually part time job/ assignments in same profession as being in employer pays a big dent in service records.

its better to treat the whole receipt in "income from other sources" for good relations between employer and employee.

Devendra (Chartered Accountant) (4775 Points)
Replied 04 April 2011

YOU CAN SHOW THE PART TIME INCOME AS A BUSINESS INCOME (UNDER PGBP) AND CLAIM THE EXPENSES AGAINST THE INCOME.

FILE ITR - 4

REGARDS,

DEVENDRA

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 04 April 2011

Originally posted by : Devendra
	YOU CAN SHOW THE PART TIME INCOME AS A BUSINESS INCOME (UNDER PGBP) AND CLAIM THE EXPENSES AGAINST THE INCOME. FILE ITR - 4 REGARDS, DEVENDRA

request you to read the undernoted article specially clause 1 and 2 of conclusion

https://www.akosha.com/employment-law-hr/article/can-i-start-business-competing-my-former-employer

Rahul Agarwal (Future CA) (217 Points)
Replied 05 April 2011

JoshV,

Well Show His part time income as Miscellaneous income and claim expenses incurred in relation to earning that income under this head only.

There is an option in ITR under Income from other sources where you claim the expenses incurred by you.

For this thing you dont need to file ITR 4, Simply file ITR 2

CA.Naveen Kailkhuri (CA) (38 Points)
Replied 05 April 2011

Dear Friend,

The simplest way out in your case is just take the advantage of Section 57 of IT Act, which enables one to deduct the expenses incurred to earn an income.

Hence, just show the part time assignment income as "Income from Other Sources" and claim reasonable expenses as deduction u/s 57.

This will resolve your problem and will make your client happy!

Regards